Games as a Service: An Evolutionary Tale

If you enjoy downloading updates to your favorite game and appreciate how your gameplay continues to evolve over time, you’re probably a fan of “Games as a Service,” or GaaS. This distribution model has rocked the gaming industry, changing the way consumers purchase and experience games. Let’s explore how it all went down.

Long ago, a video game was a physical entity, something you could hold in your hands, in cassette, floppy disk, CD, or DVD form. Lose that item and you’d lose access to the game. Each game was a one-time, standalone purchase, also referred to in the industry as Games as a Product (GaaP).

These ancient behemoths still wander the lands, but a few decades ago, a new form of game emerged, almost unnoticed at first — Games as a Service (GaaS). The evolution has been rapid and explosive, quickly building out an evolutionary branch that has arguably taken over the industry.

Games using the GaaS model differ from their forebears in that they’re no longer static with a beginning, middle, and end. Rather, these keep going over time, rolling out creative iterations of upgrades and new content. GaaS evolved subscription models, microtransactions, gated content, and the free-to-play model. It ultimately revolutionized the way game data is stored and how companies access that data.

The opportunity for rapid iteration provided by GaaS moved the burden of game storage from the client side to massive servers owned and operated by the game company or its publishers. This both reduced the risk of cheating and hacks, and also placed the player’s usage information in the hands of business intelligence teams. Big data came to stay.

A service-driven game company creates and publishes content. They then analyze player behavior (including monetization) and tweak gameplay based on feedback. At the same time, the company will develop new in-game monetization offers (such as content, cosmetics, boosts) and plot out new content (including expansions and events). These efforts are repeated throughout the game’s online life cycle.

Among the first PC genres to emerge from this new branch were the venerable massively multiplayer online games (MMOGs). This new breed of game was pioneered by titles like Ultima Online, EverQuest, and World of Warcraft, and were soon followed by countless others looking to replicate their success. These games all included a monthly subscription fee to cover ongoing content creation. The outcry was impassioned and immediate from traditional gamers who were used to getting everything in a single, boxed purchase. Those objections were quickly drowned out in the flood of players who rushed to embrace this new model.

The now familiar concept of “downloadable content” was introduced to implement patches and fixes, along with special events, but was quickly adapted to extend the life of game franchises before requiring a full development reboot from scratch in the form of a sequel or spinoff. New content could be delivered through downloads, for a fee. Major expansions to games continued to be sold through brick and mortar stores, but in the past 10 years, these have moved entirely to virtual shops, saving vast amounts of cash in production, packaging and distribution costs.

At the same time, there was a sustained undercurrent of resistance to monthly fees outside of core players, which has led them to remain at $15.00/month USD for over 20 years. If companies couldn’t increase the rate without losing players, how could companies make up the difference? They tried a few approaches:

• With revenues dropping from subscriptions, a new innovation was developed, borrowed from the rapidly burgeoning mobile game market and also inspired by collectible card games: microtransactions, where players purchase virtual items for small amounts of money. (This term is somewhat of a misnomer, as many of the virtual items and packages sold are in the $50-100 range.)
• Another form of monetization came in as gated content. Players were invited to download and play games for free, but often for a limited time, restricting access to certain areas, roles, or rising in levels, unless the player bought the game, added a recurring subscription, or invested at a certain level in microtransactions.
• Meanwhile, the free-to-play model evolved to ensure that the game worlds were not empty, because in MMOGs, players are the content, providing the camaraderie and mutual support necessary for success.

Traditional gamers playing traditional games continued to protest with each additional GaaS offering, but to little success. Overall, this format has become widely accepted, especially as younger gamers enter the market. For them, GaaS is the only model they’ve ever known.

Rich Weil, ModSquad’s Senior VP of Global Operations, outlines the effect of GaaS on the gaming industry: “This new dynamic has presented both opportunities and challenges for developers and publishers. Opportunity in the form of gaining a wealth of data on how their players do everything, from signing up for a game to when they eventually stop playing. The challenges come with the need to properly interpret that data and take appropriate action. This is no small task; actions that improve quality of play for one subset of players could greatly anger another subset. This balancing act has also underlined the importance of customer support and community relations, especially around the constantly evolving communications needed in GaaS companies.”

The future of games remains fluid, with more formats evolving from the unique combination of culture and technology that we’ve come to embrace. Virtual and augmented reality are still in their infancy, and will benefit as high speed, low cost internet becomes more widely available around the globe. Moreover, as more and more people get internet in places like Italy, people are switching from physical games at land-based casinos and board game rooms to games like online poker and slots which are pay-to-play, according to recent data surfaced by a Stranieri.com study.

While standalone games do still exist, GaaS has become the most profitable arm of the game world across all platforms and warrants a commensurate increase in customer support and engagement. Player loyalty and longevity is everything. Today’s game customer demands fast, positive interaction and response to issues. They will no longer tolerate sitting in a help queue for five days or more, and they tend to dislike automated responses. Finding the balance between sustained revenue growth and effective support is the key to long-term relationships with players. That combination is, without a doubt, the winning move.